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50 views10 pages

© Oxford University Press 2013. All Rights Reserved

Uploaded by

akanksha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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© Oxford University Press 2013. All rights reserved.

Reasons for Demand Forecasting

To maximize gains
from events, which
are the results of
actions taken by the
To maximize gains organization To minimize losses
from events external associated with
to the organization uncontrollable events
(from the external external to the
environment) organization

To develop policies Reasons To offset the


that apply to people actions of
for Demand
who are not part of competitor
the organization Forecasting organizations

As an input to
To develop administrative Aggregate Production
plans and policy internal Planning and / or
to an organization (e.g. Material Requirements
personnel or budget) Planning (MRP)

In order to perform In decision making


adequate staffing to for Facility Capacity
support production Planning and for
requirements Capital Budgeting

© Oxford University Press 2013. All rights reserved.


Demand Forecasting for Cash in ATMs of Banks

Paul and Mukherjee (2004) highlighted several factors,


as follows, that are considered in demand forecasting
for cash in ATMs:
•Prevent a stock-out while avoiding unnecessary idle
cash in the ATM
•Minimize the lead time to take and fill cash in the ATM
•Minimize the cost of taking and filling cash in the ATM

© Oxford University Press 2013. All rights reserved.


Demand Forecasting for Cash in ATMs of Banks

• Create supply chain architecture (especially when outsourced


agencies are involved in the process of taking and filling cash in
the ATMs) conducive to the achievement of the previous
objectives
• Seasonal factors like weekends and festivals result in higher
demand for cash through ATMs
• Banks servicing salary and pension accounts experience more
cash withdrawals from their ATMs on the dates immediately after
salary/ pension is credited in the accounts.

© Oxford University Press 2013. All rights reserved.


Methods of Demand Forecasting
Demand Forecasting

Qualitative Analysis Quantitative Analysis

Customer Survey Sales Force Composite


Time Series Analysis Causal Analysis

Executive Delphi
Opinion Method Simple Moving Simple Trend Analysis
Average Exponential
Smoothing

Past
Analogy Holt’s Double Winters’s Triple
Exponential Exponential
Smoothing Smoothing

Forecast by
Linear
Regression
Analysis

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Actual Actual
Demand Demand

Time
Time
No growth or decline trend; no seasonal No growth or decline trend; seasonal
variation – simple (or weighted) moving variation present – simple moving
average; simple exponential smoothing average

Actual
Actual
Demand
Demand

Time Time
Linear growth (or decline) trend; no Linear growth (or decline) trend; seasonal
seasonal variation –Holt’s double variation present – Winters’s triple
exponential smoothing exponential smoothing; linear regression
analysis

Different Types of Demand Patterns and


Suitable Time Series Forecasting Methods
© Oxford University Press 2013. All rights reserved.
Forecasting by Linear Regression Analysis

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Measurement of Forecasting Errors

• Running Sum of Forecast Errors (RSFE)


• Mean Forecast Error (MFE)
• Mean Absolute Deviation (MAD)
• Mean Squared Error (MSE)
• Mean Absolute Percentage Error (MAPE)
• Tracking Signal (TS)

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Forecast Control Limits

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New Product Demand Forecasting

© Oxford University Press 2013. All rights reserved.

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